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A consulting contract is one that’s made between a freelance consultant and their client, detailing the terms of their working arrangement. It should cover the nature of the project, the desired outcomes, how long the project will last, key milestones, and payment details, among other things.

This type of contract is often used by businesses engaging outside experts to deliver specialist services or provide expert advice. But they can (and should) also be used by freelance consultants entering into an agreement on their own terms. 

Here we take a look at these contracts from the freelancer’s point of view.

Image credits: template.net

1. Why do you need a consulting contract?

A clearly defined consulting contract allows you to plot milestones with ease, get to grips with your cash flow, and quickly clear up minor misunderstandings before they snowball and derail the project.

And if those misunderstandings do get out of hand, your contract offers protection from project killers, like fundamental disagreements over direction, or the dreaded ‘scope creep’. 

But perhaps most importantly, it provides a solid framework around which you can manage every single aspect of the project and your working relationship.

So, it’s vitally important that the agreement you put together contains the right information and the right amount of detail to support and protect you. 

2. What should you include in your contract?

At a minimum, your consulting contract should include the following information:

  • What you are being hired to do (in as much detail as possible). You may wish to include what you’re NOT being hired to do also, so as to clearly define your role and responsibilities.
  • The length of the agreement. Is it a fixed term, a one-off project, or open-ended?
  • Frequency, amount and manner of payment. Are you being paid a flat fee, an hourly rate, a retainer fee? How much? How often? When is it due?
  • How your expenses are handled. Do you need to submit receipts? Will they cover mileage? Leave nothing to chance.
  • Who owns the intellectual property created under the terms of the contract. This is particularly important, and if not made painstakingly clear in the contract, it can lead to litigation.

These are the non-negotiables. Your contract MUST include this info. And if the above make up the bones of a consulting agreement, our tips below add the meat. 

3. Creating a solid freelance consulting contract

Keep on reading to discover the 5-step recipe for creating a bullet-proof consulting contract.

Image credits: wpamelia.com

3.1. Keep it simple (Language)

In order for this contract to work for both you and your client, it must be written in a language that you both understand. In other words: Keep It Simple! 

There’s no point trying to shoehorn legal terms into the document or choosing a contract template covered in jargon if neither of you actually understand what you’re signing. Especially when some of those terms take on a very specific meaning where the law is concerned. 

When creating your contract, simply use plain English, make sure each obligation is clearly catered for, and avoid ambiguous language where possible (more on that below). In fact, taking this approach allows you to create a document that functions as a “business enabler” rather than an obstacle.

3.2. But not too simple (Details)

While it’s important to have a contract that’s easy to understand, that doesn’t mean it can be light on detail. More often than not, contracts are breached because of a lack of detail, or because the words written were open to interpretation. 

For instance, if, as part of your consultancy service, you provide your client with a monthly report, you should clearly state when and how this report will be delivered to avoid any ambiguity. I.e. “on the 27th of every month via email” and not “at the end of the month”.

3.3. Guard your secrets (Confidentiality) 

As a freelance consultant, you’re being hired for your skill, experience and know-how. You’ve honed this knowledge over many years, and chances are you’ve developed your own processes and systems to get the job done. 

Your contract can help you protect your most guarded trade secrets by making provisions for confidentiality. It should prevent your client from disclosing your strategies, particularly if doing so is likely to be detrimental to your business.

What’s more, the contract should also forbid your client from disclosing the details of your contract, such as how much you are being paid, for example. Speaking of which… 

3.4. Get what you’re owed (Payment)

We’ve already mentioned above that info relating to payment is a non-negotiable in a contract, but when it’s your livelihood at stake, it bears repeating. 

You absolutely cannot leave getting paid (and paid on time) to chance. There’s no room for ambiguity or interpretation when it comes to this part of a consulting contract.  

The contract must clearly stipulate how much you are being paid, how you are being paid (i.e. a percentage up-front and the rest on delivery), and the method of payment you prefer. You should also include details regarding late payment, non-payment, and any penalties attached. 

3.5. Have a way to walk away (Termination)

One way or another, a contract needs to come to an end. In an ideal world, it’s because you’ve completed the work on time and to a satisfactory standard. 

However, as experienced freelance consultants will attest, we’re not always working in an ideal world, and sometimes, things go wrong. If your client does not hold up their end of the bargain, your contract should contain a section that allows you to legally terminate the agreement. 

Within any termination clause, you should also clearly define what happens to any payment received, or any payment outstanding. For example, if you’ve received an up-front deposit, and the client then changes their mind about the project, your contract can state that in such a scenario, you get to keep the money. Of course, in return, they’ll want language included that states that they have the money returned if you fail to deliver or renege on the contract.  

And you may also wish to include a notice period allowing you to end the agreement should you be faced with a personal situation outside of your control, such as a bereavement or ill-health.

By including this information and following these tips, your freelance consulting contract will be ready to roll in no time. 

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